Question

On January 1, year one, the Rhode island redbirds organization purchased new workout equipment for its athletes. The equipment had a cost of $15,600, transportation costs of $450, and set-up costs of $290. The redbirds spent an additional $350 training their athletes on the proper use of this equipment. The expected useful life is five years. no residual value is anticipated. What is the amount of depreciation expense reported in the first year of operations?

Answer 1

The depreciation expense reported in the first year of operations is $2,938.

Step-by-step explanation:

The amount of depreciation expense reported in the first year of operations can be calculated using the straight-line depreciation method. This method evenly allocates the cost of an asset over its expected useful life. In this case, the workout equipment cost $15,600 plus transportation costs of $450 and set-up costs of $290, resulting in a total initial cost of $16,340. There was an additional cost of $350 for training the athletes.

To calculate the annual depreciation expense, we subtract the estimated residual value (which is $0 in this case) from the initial cost and divide it by the expected useful life. So, the depreciation expense for the first year is:

(Initial cost + Training cost) / Useful life = Depreciation expense

For the redbirds organization, the calculation is:

($16,340 + $350) / 5 = $2,938